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Walker issues final report, asks CPAs to lead in fiscal responsibility

BY KEN TYSIAC

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Former U.S. Comptroller General David Walker is closing a chapter in
his campaign against the rising tide of government debt, but he is
urging his fellow CPAs to help fight against what he calls fiscal
irresponsibility by elected leaders.

Walker on Tuesday released the final
report of his Comeback America Initiative, once again highlighting
problems facing the finances of the U.S. federal government, states,
and cities. Walker said he is closing his not-for-profit initiative to
keep a long-standing commitment to his wife, Mary, to spend more time
with his family.

But he is not retiring, he said, and as long as he is healthy, he
won’t quit his fight for government fiscal responsibility. He called
on CPAs to join him.

“People need to keep in mind that the ‘P’ in ‘CPA’ stands for
‘Public,’ ” Walker said last week during an interview with the
JofA. “We have a public trust. We have to act in the public
interest. We need make sure we are taking steps that improve
accounting and reporting for governments. We’ve come a long way, but
we’ve got a ways to go.”

The final Comeback America report presents a calculation that
combines the federal government’s explicit liabilities, commitments,
contingencies, and unfunded Social Security and Medicare promises.

In present-value dollars, the total in 2012 of these
“off-balance-sheet obligations” was $69.7 trillion, or $221,400 per
person. The total has more than tripled since 2000, when it was $20.4
trillion, according to Walker’s analysis. Walker said most states and
many cities also have financial problems that mirror the federal
government’s, with unfunded obligations for retirement and retiree
health care, and outdated tax systems.

Although Walker said there has been a dramatic increase in the
percentage of Americans concerned about the nation’s deteriorating
financial condition, his report cited a CBS
poll in March in which just 42% of respondents said reducing the
federal budget deficit would make the nation’s economy better. Almost
as many—39%—said they didn’t know enough to determine what effect
reducing the deficit would have on the economy.

CPAs can lead

Against this backdrop of misunderstanding, Walker said, it is
important for CPAs to use their knowledge and skills to lead the way
toward a better financial future.

“We need to help make sure that our profession is in the lead, and
tell the facts, the truth, the tough choices, in a professional,
objective, nonpartisan, and non-ideological fashion,” he said. “We
need to lead by example and make sure we practice what we preach and
are putting our own finances in order with regard to planning, saving,
investing, and not taking on too much debt. And we need to try to lead
the way in making sure that current elected officials and those who
want to represent us at the state and local level are taking these
issues seriously.”

The Comeback America report describes seven strategies that Walker
believes should be taken to reduce the deficit and restore financial
balance to the U.S. government:

Spending and tax reforms. Ultimately, Walker
believes Congress should agree to reductions in Medicare, Medicaid,
Social Security, and other social insurance and health care
spending. In addition, the report said, Congress should set a target
for additional revenue through tax reform. If such a “grand bargain”
is beyond the reach of Congress in 2013, Walker said Congress should
try to reach a short-term deal to replace the sequester with more
intelligent spending cuts, coupled with targeted short-term
investments and budgeting/spending process reforms.

Changing the metrics. The report advocates focusing
on public debt as a percentage of GDP, comparing U.S. debt levels to
those of other industrialized nations, and increasing transparency
regarding the intergenerational implications of our current fiscal
path.

Engaging the public. Fiscal reform advocates need
to do a better job explaining the problem in ways that everyday
Americans can understand, according to the report. In addition, the
report says, a more diverse audience—including college students and
younger workers—should be targeted and encouraged to get involved.

Getting local. In addition to explaining the
problems at the federal level, the report says, advocates should
describe the challenges state and local governments face.

Grass-roots efforts. Although many groups are
engaging the public on these issues, a more extensive grass-roots
effort outside Washington is needed, the report says.

Addressing the leadership deficit. The president
and bipartisan leaders of Congress need to stand up and lead on this
issue, the report says. Members of both parties must make difficult
political choices that put the public ahead of their own party and
personal reelection prospects, according to the report.

Political changes. Walker calls for term limits,
campaign finance reform, redistricting reform, and integrated
primary elections open to all voters. He also encourages an Article
V Convention to propose constitutional amendments aimed at
financial, electoral, and states’ rights reforms.

“We have a dysfunctional democracy,” Walker said. “We have a
republic that’s no longer representative of and responsive to the
public. So, in the short term, what you have to do is make the
political price for current elected officials greater for doing
nothing than for making tough choices.”

Numbers are not insurmountable

Although some of the numbers are daunting, Walker said it’s not too
late to fix the problem. He said that if obligations are measured in
discounted present-value dollar terms, changes phased in over a number
of years could result in a decrease of tens of trillions of dollars
because of compounding.

And as he prepared for a new chapter in his advocacy efforts, Walker
appealed to CPAs to step forward and make a difference. The AICPA has
taken a prominent role in promoting
understanding of the federal government’s fiscal obligations and
has supported a national dialogue to improve the nation’s fiscal health.

“We need to get involved,” Walker said. “If we get involved, we can
make a difference, and we can help to make sure that our collective
future is better than our past. Our country’s future and our families’
future are at stake. Let’s fight for their future.”

TAX NEWS

President Barack Obama signed legislation that retroactively extended more than 50 expired tax provisions for 2014, allowing taxpayers to take advantage of a host of tax incentives during this filing season.

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